BRI Receives Analysts Buy Recommendation as MSMEs Financing Strategy Drives Growth

Rhea-AI Summary

BRI, Indonesia's leading MSME financier, reported a 10.89% year-on-year growth in its credit portfolio, reaching IDR 1,308.65 trillion by March 2024. Over 83% of this portfolio was allocated to MSMEs. Analysts from Sucor Securities, Macquarie, and MNC Securities have issued 'Buy' recommendations for BBRI stock, with target prices ranging from IDR 6,300 to IDR 7,100. BRI's subsidiaries, Pengadaian and PNM, contributed significantly to its total assets and net income growth. The bank maintains a strong ROE above 20% and a NIM above 7%. Despite challenges in asset quality, BRI's robust capital position and loan loss coverage are expected to support moderate revenue growth of 5% to 10% YoY through 2025. The Bloomberg consensus among 35 analysts also indicates a bullish outlook with a 12-month price target of IDR 6,175.

Positive

• Credit portfolio grew by 10.89% YoY, reaching IDR 1,308.65 trillion.
• Over 83% of credit allocated to MSMEs.
• Subsidiaries Pengadaian and PNM saw increased contributions to total assets and net income.
• ROE maintained above 20%.
• NIM consistently above 7%, exceeding industry average.
• Analysts' target prices range from IDR 6,300 to IDR 7,100, reflecting confidence.
• Bloomberg consensus 12-month price target of IDR 6,175 with a buy recommendation from 33 analysts.
• Strong capital position and adequate loan loss coverage.

Negative

• Challenges in managing asset quality.
• Revenue growth expected to be moderate at 5% to 10% YoY.
• Short-term corrections might be needed to ensure long-term growth.

JAKARTA, Indonesia, June 3, 2024 /PRNewswire/ -- PT. Bank Rakyat Indonesia (Persero) Tbk (IDX: BBRI) remains Indonesia's leading MSME (Micro, Small and Medium Enterprise) financier, with its credit portfolio growing to IDR 1,308.65 trillion by March 2024, up 10.89% year-on-year. Over 83% of this, or IDR 1,089.41 trillion, was allocated to MSMEs.

Supported by an extensive branch network and empowerment initiatives, BRI has achieved an impressive Return on Equity (ROE) and maintained a Net Interest Margin (NIM) consistently above 7%, exceeding the industry average of around 6%. "Therefore, we expect the ROE to be maintained above 20%, relatively in line with the average of other major banks," quoted from Edward Lowis of Sucor Securities' research on Monday (5/27/2024).

BRI's ultra-micro portfolio through Pengadaian and PNM is on a growth trajectory, with this segment achieving higher margins and outpacing typical bank credit growth. "The total asset contribution of these subsidiaries has reached almost 10% of the total in the first quarter of 2024 (compared to 6% in 2020), while the contribution to net income has also grown to 14% of the total (compared to 10% in 2022)," he wrote.

Edward acknowledges challenges in managing BRI's asset quality but expects moderate revenue growth of 5% to 10% YoY in 2024 and 2025. He expects BBRI to maintain above-average NIM and growth due to its dominance in microloans. "Adequate loan loss coverage and a strong capital position will help the bank weather near-term challenges," he added. Therefore, Sucor Securities recommends buying BBRI shares with a target price of IDR 6,400, reflecting a 2.8x PBV for 2024, based on a sustainable ROE of 23% and a cost of equity of 12%.

Similarly, Jayden Vantarakis of Macquarie has a target price of IDR 7,100 for BBRI shares, while Victoria Venny of MNC Securities has a Buy rating with a target price of IDR 6,300. A Bloomberg consensus of 35 analysts sets a 12-month price target of IDR 6,175, with 33 analysts unanimously recommending a buy on a bullish outlook.

BRI's Finance Director Viviana Dyah Ayu R.K. said management's focus is to ensure the company can grow better and healthier in the long run, even if it requires small corrections in the short run. "For long-term shareholders, the refinements and improvements we are making now should provide greater benefits." 

For more information on BRI, please visit www.bri.co.id

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SOURCE PT Bank Rakyat Indonesia Tbk (BRI)

FAQ

What is the target price for BBRI stock set by Sucor Securities?

Sucor Securities has set a target price of IDR 6,400 for BBRI stock.

What is the expected revenue growth for BBRI in 2024 and 2025?

Revenue growth for BBRI is expected to be moderate, ranging from 5% to 10% year-on-year.

How much did BRI's credit portfolio grow by March 2024?

BRI's credit portfolio grew by 10.89% year-on-year, reaching IDR 1,308.65 trillion by March 2024.

What percentage of BRI's credit portfolio is allocated to MSMEs?

Over 83% of BRI's credit portfolio is allocated to MSMEs.

What is the Net Interest Margin (NIM) of BRI?

BRI maintains a Net Interest Margin (NIM) consistently above 7%, exceeding the industry average.

What is the Return on Equity (ROE) for BRI?

BRI has achieved an impressive Return on Equity (ROE) above 20%.

What is the Bloomberg consensus 12-month price target for BBRI?

The Bloomberg consensus 12-month price target for BBRI is IDR 6,175.

What challenges does BRI face according to the analysts?

BRI faces challenges in managing its asset quality.

Which subsidiaries of BRI have contributed to its growth?

Pengadaian and PNM, subsidiaries of BRI, have significantly contributed to its total assets and net income growth.